TORONTO, June 1, 2015 /CNW/ - A Hearing Panel of the Central Regional Council of the Mutual Fund Dealers Association of Canada ("MFDA") has issued its Decision and Reasons in connection with a disciplinary hearing held in Toronto, Ontario on October 20 and 22, 2014, March 30 and 31, 2015, in the matter of David H. Karas (the "Respondent").
In its Decision and Reasons, the Hearing Panel found that the two (2) allegations made against the Respondent in the Notice of Hearing issued July 2, 2013, had been established. In particular:
Allegation #1: Between 2002 and 2008, the Respondent misrepresented, failed to fully and adequately explain, or omitted to explain the risks, benefits, features and costs of leveraged investment recommendations that he made to at least 18 clients, thereby failing to ensure that the leveraged investment recommendations were suitable for the clients and in keeping with their investment objectives, contrary to MFDA Rules 2.2.1 and 2.1.1.
Allegation #2: Between 2002 and 2008, the Respondent failed to ensure that his leveraged investment recommendations were suitable for at least 18 clients and in keeping with their investment objectives, having regard to the clients' "Know-Your-Client" information and financial circumstances, including but not limited to the clients' ability to afford the costs associated with the investment loans and withstand investment losses, contrary to MFDA Rules 2.2.1 and 2.1.1.
As a consequence, the Hearing Panel has imposed the following sanctions:
- a permanent prohibition on the authority of the Respondent to conduct securities-related business in any capacity over which the MFDA has jurisdiction;
- a fine in the amount of $750,000; and
- costs in the amount of $20,000.
Copies of the Decision and Reasons and the Notice of Hearing are available on the MFDA website at www.mfda.ca. During the period described in the Notice of Hearing, the Respondent carried on business in the Barrie and Toronto, Ontario areas.
The MFDA is the self-regulatory organization for Canadian mutual fund dealers, regulating the operations, standards of practice and business conduct of its 103 Members and their approximately 80,000 Approved Persons with a mandate to protect investors and the public interest. For more information about the MFDA's complaint and enforcement processes, as well as links to 'Check an Advisor' and other Investor Tools, visit the For Investors page on the MFDA website.
SOURCE Mutual Fund Dealers Association of Canada
For further information: Shaun Devlin, Senior Vice-President, Member Regulation, Enforcement, 416-943-4672, [email protected]